Working to ensure that teams are more productive and effective is at the heart of modern management. A recent study from the University of Waterloo and Wilfrid Laurier University offers insights into fairer employee rewards and better team dynamics.

The research reveals that when less skilled employees voluntarily report their performance, they tend to exaggerate their achievements and request higher bonuses. They also show less effort and fairness concerns when sharing their contributions voluntarily.

Fairer allocation

However, requiring employees to explain their contributions results in fairer bonus allocations and enhances team dynamics. Mandatory explanations encourage honesty and diligence among employees, leading to improved decision-making by managers.

“If management would like this information to be voluntarily provided, it is important to require an explanation to prevent self-interested bias among team members with lower abilities,” the researchers explain. “This bias not only decreases the usefulness of the communication, but also compromises managers’ reward allocation decisions and team dynamics.”

The study engaged 192 undergraduate students from a Canadian university, randomly assigning them various roles within a fictional company and organizing them into teams of four. Following decision-making exercises, participants provided feedback through a questionnaire covering the process and their demographic information.

“We also observe that among low-ability team members, the greater strategic bias observed when the relative contribution communication is voluntary, compared to mandatory, diminishes when an explanation is required,” the researchers conclude.